P2P Betting: Nigeria’s Next Frontier in the Gaming Sector

Iyke Bede explains that Peer-to-Peer (P2P)  betting platforms allow individuals to bet directly against each other rather than against a bookmaker, acting as intermediaries providing the technology and framework for users to place and accept bets from other users

Chances are, you are one of one in every four Nigerians who engage in daily betting, thereby contributing to the country’s expanding gaming sector, accumulating over N730 million in annual revenue.

But as vibrant as the sector seems, providing various channels (both online and offline) to place wagers against bets set by bookmakers, it has been slow to adopt Peer-to-Peer Sports Betting (P2P) platforms that are now becoming a preferred channel for punters’ in the US, UK, and other major sports betting markets.

Over the span of two decades, Nigeria’s sports betting sector has witnessed significant growth, reflected in revenue accrued, the use of cutting-edge technologies to facilitate various processes, and the industry’s fair adherence to the regulatory framework of the National Lottery Regulatory Commission (NLRC).

Currently, the traditional model widely adopted by the sector is one where the operators set the odds, allowing punters to browse and cherry-pick games that amplify their odds of winning. In this model, the operator pays out winnings, and in other cases where the punters miss a prediction or two, claim their wager. While this model works, the P2P variant offers more flexibility to punters to maximise their winnings. Here’s how it works:

P2P betting platforms allow individuals to bet directly against each other, rather than against a bookmaker, acting as intermediaries providing the technology and framework for users to place and accept bets from other users, unlike traditional betting, where the bookmaker sets the odds and takes on the risk. Here, users set their own odds and stake with an earmarked portion of their earnings. The operators in this scenario gain a commission, usually five to seven per cent, for the infrastructure they provide. 

As noted earlier, these P2P platforms have been gaining popularity in international markets. Some of the remarkable ones include BetFair, Smarkets, ZenSports, Pinnacle, and PeerBet.

According to Growjo, BetFair’s annual revenue stands at $169.7 million, with Pinnacle and Smarkets recording $68 million and $12 million respectively. Although it pales in comparison to the likes of Bet365, which recorded annual revenue of £3.39 billion in 2023, it counts towards increasing revenue for the sector. 

In the Nigerian context, the gaming sector is poised for continued growth driven by the widespread accessibility of mobile devices and the internet, a large youth demographic, and economic challenges that make betting an appealing avenue for supplementary income. These factors create opportunities for peer-to-peer (P2P) platforms to thrive.

While existing infrastructure of traditional platforms ensures the protection of players’ data, there have been incidents where bettors, particularly those betting in person, were cheated out of their winnings by agents exploiting system loopholes. P2P platforms mitigate these issues through Smart Contracts, where creators (who propose bets for specific games) and backers (who accept these odds and place bets) deposit funds on the platform, receiving their winnings after the conclusion of the games. In more dynamic P2P sports betting markets, Blockchain technology is also being adopted to enhance security and facilitate trustless transactions.

Across the continent, the uptake of P2P platforms has been slow. In 2021, the South African startup Wayja pioneered P2P betting in the region, becoming the first to do so officially. Despite this milestone, adoption of this model has been sluggish, with Nigeria notably absent from participation.

Currently, regulatory agencies at both state and federal levels have imposed limitations on operators, especially regarding taxation laws that do not align with current realities. This alone serves as a cautionary tale that most investors and operators take heed of, possibly deterring them from introducing products that are not yet accommodated by existing legislation. The regulators must understand the ripple effects of their actions and the losses currently accrued from the absence of P2P platforms, despite Nigeria being one of the biggest sports betting markets on the continent.

The emergence of P2P betting platforms represents a significant opportunity within Nigeria’s vibrant gaming sector. These platforms promise greater flexibility and potential for punters, addressing current limitations of traditional models. 

By and large, for P2P platforms to flourish, regulatory frameworks must evolve to accommodate these new technologies while safeguarding consumer interests. The future success of P2P betting in Nigeria will depend on how effectively these challenges are navigated, ensuring a balanced approach that fosters both innovation and regulatory compliance.